- Corn futures moving higher on ethanol policy
- ‘Protecting Your Profits’ webinar is April 27
- February fluid milk sales reviewed
- IDDBA: Food inflation concerns rising
- Global dairy product prices increase too
- USDA enhances aid for forage losses due to drought, wildfires
As fuel prices continue to rise due to the Russia-Ukraine military conflict and other factors, the Biden administration announced steps to boost biofuel production and use in the U.S. During the week of April 11-14, September 2022-July 2023 corn futures prices on the Chicago Mercantile Exchange rose about 18 cents per bushel, averaging $7.21 per bushel.
Financial outlays announced by the Biden administration include:
- $700 million for biofuels producers to expand markets for agricultural products
- $100 million in grants for biofuels infrastructure to make it easier for gas stations to sell and to significantly increase the use of higher blends of bioethanol and biodiesel at the pump: The funding will provide grants to refueling and distribution facilities for the cost of installation, retrofitting or otherwise upgrading of infrastructure required at a location to ensure the availability of fuel containing ethanol blends of E15 and greater or fuel containing biodiesel blends B-20 and greater.
- $5.6 million in grants for nine projects in seven states (California, Delaware, Illinois, Maryland, New Jersey, New York and South Dakota) for infrastructure to expand availability of higher-blend renewable fuels by approximately 59.5 million gallons per year
In addition, the EPA will issue a national emergency waiver by June 1, allowing E15 gasoline (a 15% ethanol blend) to be sold this summer. Without this action, E15 cannot be used in most of the country from June 1 to Sept. 15. E15 is currently offered at 2,300 gas stations in the country.
Prior to the announcement, the recent USDA World Ag Supply and Demand Estimates (WASDE) report estimated approximately 5.375 billion bushels of corn would be used for ethanol and byproducts (distillers grains, corn gluten feed and corn gluten meal) production in marketing year 2021-22, up from 5.0333 billion bushels in 2020-21 and 4.875 billion bushels in 2019-20.
The same report estimated soybean oil use for biofuel at 10.7 billion pounds in 2021-22, up from 8.85 billion pounds in 2020-21 and 8.658 billion pounds in 2019-20.
A special edition of the Pennsylvania Center for Dairy Excellence (CDE) “Protecting Your Profits” webinar will focus on rising interest rates and the potential impact on dairy profitability.
Zach Myers, risk education manager with CDE, will host the monthly webinar, April 27, 12-1 p.m. (Eastern time). The program will feature Sam Miller, managing director of agriculture banking at BMO Harris Bank, who will discuss increasing interest rates, inflation and how these could impact dairy producers and the industry as a whole. Myers will also highlight Class III and IV futures milk price forecasts, as well as Dairy Margin Coverage (DMC) margins.
Advance registration is not necessary. Each webinar is available via podcast or phone. To participate, click here or phone: (646) 558-8656. When prompted, enter meeting ID 848 3416 1708 and passcode 474057.
Here’s an update on U.S. fluid milk sales data from the USDA Agricultural Marketing Service for February 2022.
Total sales: February 2022 sales of packaged fluid milk products totaled about 3.48 billion pounds, down about 3% from the same month a year earlier. At 7.28 billion pounds, year-to-date (January-February 2022) sales of all fluid products were down 2.3%.
Conventional products: February sales totaled 3.25 billion pounds, down 3% from the same month a year earlier. Year-to-date sales totaled 6.81 billion pounds, down 2.1% from January-February 2021.
- Organic products: Monthly sales totaled 225 million pounds, down 3.9% from a year earlier. At 471 million pounds, year-to-date (January-February 2022) sales of all fluid products were down 4.7%. Organic represented about 6.5% total fluid product sales in February and year-to-date.
The U.S. figures are based on consumption of fluid milk products in Federal Milk Marketing Order (FMMO) areas, which account for approximately 92% of total U.S. fluid milk sales, and adding the other 8% from outside FMMO-regulated areas. Sales outlets include food stores, convenience stores, warehouse stores/wholesale clubs, nonfood stores, schools, the food service industry and home delivery.
Awareness and concern over the rate of food inflation is growing among consumers, affecting grocery shopping location and cart content, according to a monthly update from the International Dairy Deli Bakery Association (IDDBA).
The price per unit across all foods and beverages in all stores measured by the Information Resources Inc. (IRI) rose an average of 10.3% in the four weeks ending March 27, 2022. On a per unit basis, dairy price inflation was similar to the overall average.
With the higher prices, the value of dairy product purchase was up 7.1% in March, noted Jessica Ives, professional development coordinator with IDDBA. However, on a volume (unit) basis, dairy sales were down 3%.
Among individual product categories, March fluid milk sales were up nearly 10% in value, but volume of sales was down 3.2%. Yogurt, creams and creamers, butter, processed cheese, cream cheese, whipped toppings, sour cream, cottage cheese and dairy desserts followed the same pattern. Natural cheese sales were down slightly in terms of both value and volume.
What’s next? The war in Ukraine, the renewed COVID-19 lockdowns in China, record inflation, labor shortages and supply chain challenges will have a continued effect on food and produce sales in the months to come, according to IDDBA.
The average global cost of dairy products rose for a seventh consecutive month in March, although the monthly increase was lower than other major food commodities, according to the latest United Nations’ Food and Agriculture Organization (FAO) Food Price Index.
The FAO Dairy Price Index includes global average prices for butter, cheese, skim milk (SMP) and whole milk powders (WMP). The March 2022 index increased about 2.6% from February 2022 and was up 23.6% from March 2021.
The upward trend of dairy product prices persisted, mainly supported by the tightening of global markets due to inadequate milk output in Western Europe and Oceania to meet global demand. Quotations for butter and milk powders rose steeply, underpinned by a surge in import demand for near- and long-term deliveries, especially from Asian markets and solid internal demand in Western Europe. Meanwhile, cheese markets were also facing a tight supply situation due to strong internal demand in Western Europe, but the index value eased marginally, reflecting the impacts of currency movements.
The FAO Food Price Index is a measure of the monthly change in international prices of a basket of five food commodities – cereal, vegetable oil, dairy, meat and sugar.
With persistent drought conditions in the Great Plains and West, the USDA is offering additional financial aid to link cattle with forage supplies:
- Through the Emergency Assistance for Livestock, Honeybees and Farm-raised Fish Program (ELAP), ranchers are eligible for funds to cover above-normal costs of hauling livestock to forage or other grazing acres. Previously, the program only covered costs to haul feed to livestock. The ELAP livestock and feed hauling assistance is retroactive for 2021 and will be available for losses in 2022 and subsequent years. Additionally, FSA has updated ELAP policy to cover water hauling in drought areas.
The deadline to request ELAP assistance for hauling livestock to forage in 2021 is June 30, 2022. The deadline to request all ELAP assistance for 2022 calendar year losses will be Jan. 31, 2023. Eligible ranchers should contact their Farm Service Agency (FSA) county office to apply for ELAP assistance. For fact sheets, online decision tools and eligibility requirements, click here.
- The USDA also announced that ranchers who have approved applications through the 2021 Livestock Forage Disaster Program (LFP) for forage losses due to severe drought or wildfire in 2021 will begin receiving emergency relief payments for increases in supplemental feed costs in 2021 through the new Emergency Livestock Relief Program (ELRP).
Payments to eligible producers through phase I of ELRP are estimated to total more than $577 million. To determine payments, producers must have the multiple forms on file with FSA. For fact sheets and eligibility requirements, click here.
As of April 12, USDA Drought Monitor maps indicated 41% of all beef cattle, 38% of all dairy cows, 33% of hay acres and 48% of alfalfa hay acres were located in areas experiencing D2-D4 drought levels.
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